Stocks were mixed on Thursday with small caps and the I-fund leading the large caps of the S&P 500 (C-fund.) They both also led for the week. With the market jittery over the next headline or "post" , there was some selling during the final hour of trading heading into the long holiday weekend. Bonds were hit hard with yields moving up on Thursday. The Dow took a hit due to a 22% loss in the heaviest weighted stock in the Dow, UnitedHealth Group.
The S&P 500 (C-fund) is still trying to carve out a bottom, and so far at least, the "V" bottom can still be considered a possibility. However, any weakness early this week could break important support, and then a retest of the lows becomes a higher probability. There is still a ton of resistance in the 5500 area. Trading volume has lightened up after the capitulation like spike in volume in early April.
This next chat was the 2020 Covid bear market low and there are some similarities to today's chart. Technically it looks like a "V" bottom as the low was never retested, and right now we're in a similar consolidating pattern that we saw in that 2020 "V" bottom low - right down the "death cross" of the 50-day EMA falling below the 200-day average
And the weekly chart continues to hold at key support levels - both the rising support line and the early 2022 peak.
The 10-year Treasury Yield pulled back sharply last week following the wild up and down volatile action in the weeks before, so the bond market is looking for some direction. The threat of recession and / or higher inflation caused by the tariffs may be the cause of this volatility, and even the Fed doesn't seem to know when to pull the trigger on interest rate cuts despite 3+ cuts being basically priced into the market, and the 2-year T-note at 3.76%, well below the Fed Funds Rate of 4.5%.
The indices are looking for direction as long term support battles some short-term resistance. It's really a matter of: place your bets and see what happens because there isn't a whole lot of agreement amongst the pundits out there.
It will be another slow week for economic data with the Fed's Beige Book coming out on Wednesday, and the University of Michigan Consumer Sentiment Report comes out on Friday. However, more earnings reports will start being released over the next couple of weeks.
The futures were weak on Sunday evening.
DWCPF (S-fund) is still lagging and unlike the the S&P 500, it has barely tested its old breakdown area just above 2000. The trend is down and it needs some help to improve this chart. If interest rates do start coming down I would suspect that small caps would start perking up, but the Fed has not been showing signs of making a move yet.
ACWX (I-fund) gained about 1% on Thursday and it flirted with breaking above its old broken support levels. This chart continues to hold up well compared to the US indices / funds, and the dollar's weakness (UUP) is a big reason.
The F-fund (BND) rallied back from the pop and drop from earlier in the month. That was when China and Japan were dumping US bonds, but the bond market stabilized last week and like many of the stock indices, it looks to be at a critical pivot point.
Thanks so much for reading! We'll see you back here tomorrow.
Tom Crowley
Read more in today's TSP Talk Plus Report. We post more charts, indicators and analysis, plus discuss the allocations of the TSP and ETF Systems. For more information on how to gain access and a list of the benefits of being a subscriber, please go to: www.tsptalk.com/plus.php
Questions, comments, or issues with today's commentary? We can discuss it in the Forum.
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Posted daily at www.tsptalk.com/comments.php
The legal stuff: This information is for educational purposes only! This is not advice or a recommendation. We do not give investment advice. Do not act on this data. Do not buy, sell or trade the funds mentioned herein based on this information. We may trade these funds differently than discussed above. We may use additional methods and strategies to determine fund positions.
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The S&P 500 (C-fund) is still trying to carve out a bottom, and so far at least, the "V" bottom can still be considered a possibility. However, any weakness early this week could break important support, and then a retest of the lows becomes a higher probability. There is still a ton of resistance in the 5500 area. Trading volume has lightened up after the capitulation like spike in volume in early April.
This next chat was the 2020 Covid bear market low and there are some similarities to today's chart. Technically it looks like a "V" bottom as the low was never retested, and right now we're in a similar consolidating pattern that we saw in that 2020 "V" bottom low - right down the "death cross" of the 50-day EMA falling below the 200-day average
And the weekly chart continues to hold at key support levels - both the rising support line and the early 2022 peak.
The 10-year Treasury Yield pulled back sharply last week following the wild up and down volatile action in the weeks before, so the bond market is looking for some direction. The threat of recession and / or higher inflation caused by the tariffs may be the cause of this volatility, and even the Fed doesn't seem to know when to pull the trigger on interest rate cuts despite 3+ cuts being basically priced into the market, and the 2-year T-note at 3.76%, well below the Fed Funds Rate of 4.5%.
The indices are looking for direction as long term support battles some short-term resistance. It's really a matter of: place your bets and see what happens because there isn't a whole lot of agreement amongst the pundits out there.
It will be another slow week for economic data with the Fed's Beige Book coming out on Wednesday, and the University of Michigan Consumer Sentiment Report comes out on Friday. However, more earnings reports will start being released over the next couple of weeks.
The futures were weak on Sunday evening.
DWCPF (S-fund) is still lagging and unlike the the S&P 500, it has barely tested its old breakdown area just above 2000. The trend is down and it needs some help to improve this chart. If interest rates do start coming down I would suspect that small caps would start perking up, but the Fed has not been showing signs of making a move yet.
ACWX (I-fund) gained about 1% on Thursday and it flirted with breaking above its old broken support levels. This chart continues to hold up well compared to the US indices / funds, and the dollar's weakness (UUP) is a big reason.
The F-fund (BND) rallied back from the pop and drop from earlier in the month. That was when China and Japan were dumping US bonds, but the bond market stabilized last week and like many of the stock indices, it looks to be at a critical pivot point.
Thanks so much for reading! We'll see you back here tomorrow.
Tom Crowley
Read more in today's TSP Talk Plus Report. We post more charts, indicators and analysis, plus discuss the allocations of the TSP and ETF Systems. For more information on how to gain access and a list of the benefits of being a subscriber, please go to: www.tsptalk.com/plus.php
Questions, comments, or issues with today's commentary? We can discuss it in the Forum.
Daily Market Commentary Archives
For more info our other premium services, please go here... www.tsptalk.com/premiums.php
To get weekly or daily notifications when we post new commentary, sign up HERE.
Posted daily at www.tsptalk.com/comments.php
The legal stuff: This information is for educational purposes only! This is not advice or a recommendation. We do not give investment advice. Do not act on this data. Do not buy, sell or trade the funds mentioned herein based on this information. We may trade these funds differently than discussed above. We may use additional methods and strategies to determine fund positions.
